The short- and medium-term outlook for the stock of Mahindra CIE Automative is bullish. The stock surged over 8 per cent on Tuesday and closed on a strong note. This rise has taken it well above the key resistance level of ₹234. It gives an initial confirmation of a double bottom pattern on the chart. Going forward, the chances are high for the level of ₹234 to act as a good resistance-turned-support attracting fresh buyers.
The stock has potential to reach ₹290, and even ₹310 in the next one-two months. Traders with a short-term perspective can buy the stock at current levels. Accumulate on dips at ₹236 with stop-lossat ₹218. Trail the stop-loss up to ₹265 as soon as the stock moves up to ₹280. Move the stop-loss further to ₹285 when the stock touches ₹290. Book profits at ₹300. The bullish outlook will get negated if the stock falls decisively below ₹234. In that case, a fall to ₹220 is possible. But that looks less probable as the support at ₹234 looks very strong.
(Note: The recommendations are based on technical analysis. There is risk of loss in trading.)